Date: July 2, 2025
Recent developments in South Asia underscore the contrasting trajectories of Afghanistan’s trade relations with its two key neighbors, India and Pakistan. While trade between Afghanistan and India is witnessing a significant rise, reaching USD 1 billion in the 2024 – 25 fiscal year, economic ties with Pakistan continue to suffer due to recurring border closures and rising security concerns.
India-Afghanistan: A Trade Relationship on the Rise
According to India’s Ministry of Commerce and Industry, bilateral trade with Afghanistan has surpassed USD 1 billion in the current fiscal year, marking a significant milestone amid shifting regional dynamics. This increase reflects deepening economic engagement between the two countries despite the political uncertainties following the Taliban’s return to power.
India’s continued humanitarian assistance—including food, vaccines, and medical support—has complemented commercial ties. The revival of talks regarding Iran’s Chabahar Port as a regional trade route further cements India’s long-term strategy of bypassing Pakistan to maintain economic links with Afghanistan and Central Asia. India’s diplomatic outreach has also included discussions around connectivity, visa facilitation, and the potential resumption of development cooperation in the region.
Pakistan-Afghanistan: Trade Disrupted by Insecurity
In contrast, Afghanistan’s trade with Pakistan remains deeply vulnerable to security disruptions. In June 2025, Pakistan shut down the Ghulam Khan border crossing—one of the key trade routes—citing serious security threats following a suicide bombing that killed multiple security personnel. This closure halted the movement of essential goods, including Afghan coal and construction materials, highlighting the fragility of cross-border commerce.
Pakistan’s increasingly tight border management, including tighter customs regulations and new requirements such as Certificates of Origin, has added layers of complexity to bilateral trade. Islamabad continues to voice concerns over the presence of militant groups operating from Afghan soil, while recent border clashes and infiltration incidents have intensified mistrust between the two sides.
Key Comparisons
| Aspect | India-Afghanistan | Pakistan-Afghanistan |
| Trade Volume | USD 1 billion (2024–25, increasing) | Substantial, but hindered by border closures and security incidents |
| Trade Routes | Through Iran’s Chabahar Port | Land crossings (Torkham, Ghulam Khan); vulnerable to political and security disruptions |
| Diplomatic Context | Ongoing engagement, humanitarian support | Strained relations, mutual accusations over militancy |
| Security Impact | Low | High—frequent border incidents and militant activity |
Regional Implications
The contrasting trends suggest a potential reconfiguration of Afghanistan’s economic dependencies. While Pakistan has historically served as a primary trade corridor for landlocked Afghanistan, recent instability has prompted Kabul to look eastward. The strengthening of ties with India and Iran points to Afghanistan’s interest in diversifying its trade partners and reducing reliance on Pakistan-controlled routes.
For Pakistan, these developments present both a challenge and an opportunity. Unless stability is restored along the border and trust is rebuilt through consistent and secure trade policies, Pakistan risks diminishing its traditional role as Afghanistan’s key trade intermediary.
The current trade dynamics reflect broader shifts in South Asia’s geopolitical and economic landscape. Afghanistan’s rising trade with India underscores the potential of alternative trade routes and regional cooperation. Meanwhile, Pakistan must address domestic security challenges and redefine its diplomatic engagement with Afghanistan to revive and sustain bilateral economic ties.
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